March 12, 2014 Industry news
Last Wednesday Asda gave a trade briefing in Harrogate to outline the strategic approach for the business over the coming years.
1) Household economic pressures will continue for low earners…
The average UK household has just 26 days’ worth of financial reserves, while one-third have no savings whatsoever. In addition, low earners have experienced a reduction in average working hours and earnings potential during the recession. It’s no surprise then, that shoppers are planning further grocery spending cuts in the year ahead.
2) …but online spend is strong enough to be a strategic focus
Andy Clarke, Asda’s President and CEO, outlined the business’s 3 key horizons and 6 key areas of strategic focus as follows:
Andy Clarke reconfirmed the business’s commitment to maintaining the leading value proposition of the big retail operators, and to continuing to close the price differential with the discounters. Asda will continue to invest for growth in online as a priority over convenience. He is prepared to take any associated risk, “after looking carefully at the numbers”. Despite the +5% growth model enjoyed within convenience, this sector is only “on the periphery of our 5 year strategic plan”, at least in part because of the higher operating costs incurred there. E-commerce director Kieran Shanahan explained that UK residents have an online spend, per capita, which is double that of our US counterparts – and, indeed, that they have the highest per capita online spend in the world.
3) Shopper trips may be down overall, but it is still worth investing in increasing shopper access
There has been a 12% reduction in the number of shopper trips to large format stores, which form the bulk of Asda’s estate, turnover and profit. Nevertheless, Asda has plans to grow physical access for shoppers from 53% to 70% nationally. This is due to the fact that, of the 47% of the population that has “No Access to Asda”, 50% claim they would shop at Asda given the chance. Last year, Asda increased its online capacity by 50% and now 1,000 Click & Collect sites are being targeted. New store space will focus primarily on London and the South-East, where growth is double the national average and where Asda is under-represented.
Des Harney, Industry Marketing Manager – Retail, GS1 UK